We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
MS or JEF: Which Stock to Bet on Amid Surge in Deal-making and IPOs?
Read MoreHide Full Article
Key Takeaways
Morgan Stanley's IB fees surged 23% in 2025, fueled by a deal-making rebound and IPO market reopening.
Jefferies saw IB fees rise 10% in 2025, with strong mid-market momentum and a Japan JV in development.
MS shares are up 31.8% in a year vs. JEF's 20.4% drop, as investors favor MS' diversified, stable growth mix.
With deal-making and IPO activity picking up, investment banks (IB) are reclaiming center stage. Morgan Stanley (MS - Free Report) and Jefferies Financial Group (JEF - Free Report) offer two distinct ways to play the cycle.
MS is a global bulge-bracket franchise with diversified fee engines, while JEF is an agile mid-market specialist geared to advisory and underwriting rebounds. Both have shown resilience as M&A and IPO activity rebounded in 2024-2025. With the IB outlook turning brighter, the key question is which stock offers the better risk-reward from here: Morgan Stanley or Jefferies?
The Case for Morgan Stanley
Given the industry-wide turnaround in the IB business, Morgan Stanley’s performance has been impressive. The company’s IB fees soared 23% in 2025 and 35% in 2024 after plunging in 2023 and 2022. The year 2025 began on an optimistic note, but market sentiment cooled after Trump’s tariff policies launched on 'Liberation Day', casting a shadow over deal-making. Nonetheless, the momentum has rebounded, as deal-making activity started picking up. Looking ahead, a healthy global IB pipeline, an active M&A market, “reopening of the IPO market,” and the company’s leadership position will aid it amid the changing macro situation.
Additionally, Morgan Stanley’s trading business performance has been stellar over the past several quarters, attributable to uncertainty surrounding the tariffs and macroeconomic headwinds. As market volatility and client activity are expected to remain decent, the company’s trading business will likely continue to grow.
Morgan Stanley’s partnership with Japan’s Mitsubishi UFJ Financial Group, Inc. will keep supporting profitability. In 2023, the companies announced plans to deepen their 15-year alliance by merging certain operations within their Japanese brokerage joint ventures. These efforts have solidified the company’s position in Japan’s market. The company’s Asia region revenues surged 23% year over year to $9.42 billion in 2025.
Although Morgan Stanley has leaned heavily into the IB business, it has been diversifying into more stable revenue-generating sources like asset and wealth management businesses, creating a more balanced revenue stream across cycles. The wealth and asset management segments’ aggregate contribution to total net revenues jumped to almost 54% in 2025 from 26% in 2010. As of Dec. 31, 2025, total client assets across both segments reached $9.3 trillion, bringing the company closer to its longstanding $10 trillion asset management target set by former CEO James Gorman.
The Case for Jefferies
Jefferies, while expanding into lending and merchant banking, remains primarily an investment banking-driven firm with a strong foothold in mid-market advisory and capital markets. The company’s total IB fees increased 10% in fiscal 2025 and 52% fiscal 2024 after declining in the two years before that.
Clarity on tariff plans and other economic data shows that IB business is picking up pace, as companies adapt to the changing environment. In the near term, interest rate cuts and further monetary policy easing will likely continue to support deal-making activities. The healthy IB pipeline, an active M&A market and Jefferies’ established mid-market position could enable stronger growth.
Further, JEF has been benefiting from strategic partnerships and joint ventures (JVs). As of Nov. 30, 2025, Sumitomo Mitsui Financial Group, Inc. held a 14.3% fully diluted stake in Jefferies. Building on that position, in September 2025, Sumitomo Mitsui agreed to increase its equity stake to up to 20% and signed a memorandum of understanding to form a Japan-based JV, expected to be launched in January 2027.
Beyond the IB business, Jefferies operates in the asset management business, which is much smaller than IB. Nearly 10% of its revenues come from the asset management segment, which is likely to grow as the Fed lowers interest rates, inducing investments in the markets.
JEF & MS: Price Performance, Valuation & Other Comparisons
Over the past year, shares of Morgan Stanley have risen 31.8%, while Jefferies has lost 20.4%.
One-Year Price Performance
Image Source: Zacks Investment Research
Additionally, JEF has lagged the Zacks Investment Bank industry, while MS has outperformed it. Hence, in terms of investor sentiments, Morgan Stanley clearly has the edge.
In terms of valuation, Jefferies is currently trading at a 12-month forward price-to-earnings (P/E) of 13.03X. MS stock, on the other hand, is currently trading at a 12-month forward P/E of 16.46X.
P/E F12M
Image Source: Zacks Investment Research
Therefore, Jefferies is inexpensive compared to Morgan Stanley.
JEF’s return on equity (ROE) of 7.27% is below Morgan Stanley’s 16.92%. Further, MS outscores the industry’s ROE of 12.54% while JEF does not. This reflects Morgan Stanley’s efficient use of shareholder funds to generate profits.
ROE
Image Source: Zacks Investment Research
How Do Estimates Compare for Jefferies & MS?
The Zacks Consensus Estimate for MS’ 2026 and 2027 revenues suggests a year-over-year increase of 6% and 4.9%, respectively. Also, the consensus estimate for earnings implies 8.4% and 7.1% growth for 2026 and 2027, respectively. Earnings estimates for both years have been revised north over the past week.
MS Estimate Revision
Image Source: Zacks Investment Research
On the contrary, analysts are more bullish on Jefferies’s prospects. The Zacks Consensus Estimate for JEF’s fiscal 2026 and fiscal 2027 revenues suggests a year-over-year rise of 16.5% and 16.3%, respectively. Further, the consensus estimate for fiscal 2026 earnings indicates a 50.3% jump, while the same is anticipated to increase 38.1% for fiscal 2027. Earnings estimates for both years have remained unchanged over the past seven days.
JEF Estimate Revision
Image Source: Zacks Investment Research
MS or JEF: Which Stock is Winning the Wall Street Comeback?
While Jefferies offers a cheaper valuation and faster projected growth, Morgan Stanley looks like the sturdier, higher-quality way to ride the reopening of capital markets. MS couples a rebounding IB engine with a consistently strong trading franchise that tends to benefit when volatility and client activity stay elevated. More importantly, its wealth and asset-management platform (now contributing about half of net revenues) adds durability across cycles and supports steadier capital returns.
Morgan Stanley’s Japan expansion through the MUFG alliance is another underappreciated lever, evidenced by the sharp jump in Asia revenues in 2025. Thus, MS justifies its premium multiple. For investors prioritizing resilience plus upside, Morgan Stanley is the better bet.
Image: Bigstock
MS or JEF: Which Stock to Bet on Amid Surge in Deal-making and IPOs?
Key Takeaways
With deal-making and IPO activity picking up, investment banks (IB) are reclaiming center stage. Morgan Stanley (MS - Free Report) and Jefferies Financial Group (JEF - Free Report) offer two distinct ways to play the cycle.
MS is a global bulge-bracket franchise with diversified fee engines, while JEF is an agile mid-market specialist geared to advisory and underwriting rebounds. Both have shown resilience as M&A and IPO activity rebounded in 2024-2025. With the IB outlook turning brighter, the key question is which stock offers the better risk-reward from here: Morgan Stanley or Jefferies?
The Case for Morgan Stanley
Given the industry-wide turnaround in the IB business, Morgan Stanley’s performance has been impressive. The company’s IB fees soared 23% in 2025 and 35% in 2024 after plunging in 2023 and 2022. The year 2025 began on an optimistic note, but market sentiment cooled after Trump’s tariff policies launched on 'Liberation Day', casting a shadow over deal-making. Nonetheless, the momentum has rebounded, as deal-making activity started picking up. Looking ahead, a healthy global IB pipeline, an active M&A market, “reopening of the IPO market,” and the company’s leadership position will aid it amid the changing macro situation.
Additionally, Morgan Stanley’s trading business performance has been stellar over the past several quarters, attributable to uncertainty surrounding the tariffs and macroeconomic headwinds. As market volatility and client activity are expected to remain decent, the company’s trading business will likely continue to grow.
Morgan Stanley’s partnership with Japan’s Mitsubishi UFJ Financial Group, Inc. will keep supporting profitability. In 2023, the companies announced plans to deepen their 15-year alliance by merging certain operations within their Japanese brokerage joint ventures. These efforts have solidified the company’s position in Japan’s market. The company’s Asia region revenues surged 23% year over year to $9.42 billion in 2025.
Although Morgan Stanley has leaned heavily into the IB business, it has been diversifying into more stable revenue-generating sources like asset and wealth management businesses, creating a more balanced revenue stream across cycles. The wealth and asset management segments’ aggregate contribution to total net revenues jumped to almost 54% in 2025 from 26% in 2010. As of Dec. 31, 2025, total client assets across both segments reached $9.3 trillion, bringing the company closer to its longstanding $10 trillion asset management target set by former CEO James Gorman.
The Case for Jefferies
Jefferies, while expanding into lending and merchant banking, remains primarily an investment banking-driven firm with a strong foothold in mid-market advisory and capital markets. The company’s total IB fees increased 10% in fiscal 2025 and 52% fiscal 2024 after declining in the two years before that.
Clarity on tariff plans and other economic data shows that IB business is picking up pace, as companies adapt to the changing environment. In the near term, interest rate cuts and further monetary policy easing will likely continue to support deal-making activities. The healthy IB pipeline, an active M&A market and Jefferies’ established mid-market position could enable stronger growth.
Further, JEF has been benefiting from strategic partnerships and joint ventures (JVs). As of Nov. 30, 2025, Sumitomo Mitsui Financial Group, Inc. held a 14.3% fully diluted stake in Jefferies. Building on that position, in September 2025, Sumitomo Mitsui agreed to increase its equity stake to up to 20% and signed a memorandum of understanding to form a Japan-based JV, expected to be launched in January 2027.
Beyond the IB business, Jefferies operates in the asset management business, which is much smaller than IB. Nearly 10% of its revenues come from the asset management segment, which is likely to grow as the Fed lowers interest rates, inducing investments in the markets.
JEF & MS: Price Performance, Valuation & Other Comparisons
Over the past year, shares of Morgan Stanley have risen 31.8%, while Jefferies has lost 20.4%.
One-Year Price Performance
Image Source: Zacks Investment Research
Additionally, JEF has lagged the Zacks Investment Bank industry, while MS has outperformed it. Hence, in terms of investor sentiments, Morgan Stanley clearly has the edge.
In terms of valuation, Jefferies is currently trading at a 12-month forward price-to-earnings (P/E) of 13.03X. MS stock, on the other hand, is currently trading at a 12-month forward P/E of 16.46X.
P/E F12M
Image Source: Zacks Investment Research
Therefore, Jefferies is inexpensive compared to Morgan Stanley.
JEF’s return on equity (ROE) of 7.27% is below Morgan Stanley’s 16.92%. Further, MS outscores the industry’s ROE of 12.54% while JEF does not. This reflects Morgan Stanley’s efficient use of shareholder funds to generate profits.
ROE
Image Source: Zacks Investment Research
How Do Estimates Compare for Jefferies & MS?
The Zacks Consensus Estimate for MS’ 2026 and 2027 revenues suggests a year-over-year increase of 6% and 4.9%, respectively. Also, the consensus estimate for earnings implies 8.4% and 7.1% growth for 2026 and 2027, respectively. Earnings estimates for both years have been revised north over the past week.
MS Estimate Revision
Image Source: Zacks Investment Research
On the contrary, analysts are more bullish on Jefferies’s prospects. The Zacks Consensus Estimate for JEF’s fiscal 2026 and fiscal 2027 revenues suggests a year-over-year rise of 16.5% and 16.3%, respectively. Further, the consensus estimate for fiscal 2026 earnings indicates a 50.3% jump, while the same is anticipated to increase 38.1% for fiscal 2027. Earnings estimates for both years have remained unchanged over the past seven days.
JEF Estimate Revision
Image Source: Zacks Investment Research
MS or JEF: Which Stock is Winning the Wall Street Comeback?
While Jefferies offers a cheaper valuation and faster projected growth, Morgan Stanley looks like the sturdier, higher-quality way to ride the reopening of capital markets. MS couples a rebounding IB engine with a consistently strong trading franchise that tends to benefit when volatility and client activity stay elevated. More importantly, its wealth and asset-management platform (now contributing about half of net revenues) adds durability across cycles and supports steadier capital returns.
Morgan Stanley’s Japan expansion through the MUFG alliance is another underappreciated lever, evidenced by the sharp jump in Asia revenues in 2025. Thus, MS justifies its premium multiple. For investors prioritizing resilience plus upside, Morgan Stanley is the better bet.
At present, Morgan Stanley sports a Zacks Rank #1 (Strong Buy), while Jefferies carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.